VESTED Summer 2016 by CAPTRUST

Building a Second Act Down on the Farm

Make Sure Your Credit Score Shines PLUS A Smarter Future for Seniors When Your Aging Parents Need Estate Planning The Inelegant Narrative Donor-Advised Funds: Charitable Giving Made Easy

SUMMER 2016

“Unity is strength ... when there is teamwork and collaboration, wonderful things can be achieved.” – Mattie Stepanek

At CAPTRUST, we believe we have a profound responsibility to share our success with those less fortunate than us. One way we do that is through the activities of the CAPCommunity Foundation, our in-house, employee-run charitable foundation. Its mission is to enrich the lives of children in communities we serve. The foundation, a registered 501(c)(3) charity, was formally organized in 2007 to provide our employees with opportunities to participate as a group in community outreach efforts and to offer their time, passion, and financial support as a way to give back.

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Volume 2, Issue 2 | Summer 2016

Summer is upon us in full force. And whether you enjoy the beach, the mountains, traveling to foreign locales, or staying close to home, I hope you are planning a few vacation days soon. We would be honored if you carried this summer issue of VESTED along with you to read during a quiet morning or afternoon in the shade. Our summer 2016 cover features Andrew and Liz Crush as this issue’s Second Act heroes. Their plan to buy land for a home in the Virginia countryside turned into Spring House Farm, a successful, ecologically friendly family farm that capitalizes on the growing popularity of farm-to-table and community supported agriculture.

This issue’s columns and features cover a variety of topics, including: • How advances in technology will make it easier to age in place and stay connected; • Understanding how credit scores are derived and how to avoid common credit pitfalls; • Tai chi as a way to stay active and reduce stress; and • Donor-advised funds, a convenient and flexible way to build a legacy. You will notice a slight theme in this issue: eldercare issues. We have synced up this issue’s Expert Angle and Money Talks columns as we delve into estate planning for seniors. Guest writer and eldercare attorney Michael Kemmy makes a case for proactively engaging aging parents on the topic, while VESTED columnist Kathleen Burns Kingsbury chimes in on how to start this sensitive conversation. And finally, CAPTRUST Chief Investment Officer Eric Freedman details his thinking on the capital markets in his latest installment of Investment Strategy. As always, our primary aim with VESTED is to provide you with timely, relevant, and actionable ideas and recommendations. Please help us by sending your thoughts, reactions, and story ideas to us at VESTEDmagazine@ captrustadvisors.com.

CEO Fielding Miller shares the latest company happenings with CAPTRUST colleagues at the firm’s most recent quarterly Synergy meeting.

PUBLISHER & EDITOR IN CHIEF J. Fielding Miller Chief Executive Officer EDITORS John Curry Senior Director, Marketing

Eric Freedman Chief Investment Officer

EDITORIAL ADVISORY BOARD Jeremy Altfeder Client Relationship Manager

Karen Denise Senior Manager, Wealth Operations

Rush Benton Senior Director, Strategic Wealth

Mike Gray Senior Vice President, Financial Advisor

Hugh (Trae) Cole Financial Advisor

Land Hite Senior Vice President, Financial Advisor

Ellen Crowley Vice President, Financial Advisor

Aaron J. Morris Vice President, Financial Advisor

Nick DeCenso Manager, Wealth Strategy

Mark Paccione Director, Investment Research

Teri Parker Vice President, Financial Advisor

ART DIRECTION & MARKETING Jessica Rose Art Director, Marketing Jennifer Liebel Manager, Marketing

Greg Middleton Director, Marketing

Jennifer Mastrapasqua Senior Manager, Marketing

Colby Warren Manager, Marketing

WITH THE ASSISTANCE OF Azul Photography Raleigh, NC

Classic Graphics Morrisville, NC

All the best,

J. FIELDING MILLER CAPTRUST Chief Executive Officer

800.216.0645 | www.captrustadvisors.com 4208 Six Forks Road, Suite 1700 Raleigh, NC 27609

kathleen burns kingsbury

john curry

eric freedman

nanci hellmich

Kathleen Burns Kingsbury is a faculty member of the Certified Private Wealth Advisor® program offered by the Investment Management Consultants Association, an adjunct lecturer at Bentley University, a Certified Professional Co-Active Coach®, and founder of the KBK Wealth Connection. She is a wealth psychology expert and author of How to Give Financial Advice to Women and How to Give Financial Advice to Couples.

As senior director of marketing, John Curry is responsible for all areas of strategic marketing and branding for CAPTRUST. In the industry since 1986, Curry has served in senior management roles with firms such as ProShares and AllianceBernstein and has experience in areas of strategic marketing, including product development and design, market research, branding, and sales campaign management.

Eric Freedman is CAPTRUST’s chief investment officer and is a member of the firm’s executive and operating committees. He has an undergraduate economics degree from Colgate University and received a Master of Business Administration from the Wharton School of the University of Pennsylvania. Eric is chairman of the Diocese of Raleigh Investment Committee and serves on the boards of the Ronald McDonald House of Chapel Hill and Monday Life.

Nanci Hellmich, an award-winning multimedia reporter, covered personal finance, retirement, nutrition, health, and other topics for USA TODAY for more than 30 years. She now enjoys writing for AARP, Encore.org, and other companies and organizations. She has been named one of the top 10 national online influencers on weight loss and nutrition. Nanci has appeared on both local and national television, including NBC’s TODAY Show.

Summer | 2016

Features 4

A SMARTER FUTURE FOR SENIORS

Columns 15

by Kim Painter

BUILDING A SECOND ACT Down on the Farm by Constantine von Hoffman

19 20

MAKE SURE YOUR CREDIT SCORE SHINES

by Nanci Hellmich

THE INELEGANT NARRATIVE

PASSION PURSUITS

GLEANINGS

EXPERT ANGLE

MARKET REWIND

Tai Chi for Balancing Mind, Body, and Life by Nanci Hellmich

When Your Aging Parents Need Estate Planning by Michael Kemmy

MONEY TALKS

Eldercare Planning: Five Tips for Starting the Conversation by Kathleen Burns Kingsbury

CLIENT CONVERSATIONS LASTING LEGACY

Donor-Advised Funds: Charitable Giving Made Easy by John Curry

CAPTRUST HAPPENINGS

by Eric Freedman

michael kemmy

kim painter

constantine von hoffman

Michael Kemmy is a partner at Conrad Trosch & Kemmy, P.A. in Charlotte, North Carolina. He is the head of the firmâ€™s estate planning, probate, and elder law department and is the first member of the Mecklenburg Bar to be board certified by the North Carolina Bar as an Elder Law Specialist. Kemmy has been practicing law for more than 30 years. He is a frequent lecturer and has published on estate planning and elder care issues.

Kim Painter is a freelance writer specializing in health and lifestyle issues. She was a USA TODAY staffer for many years and has continued to contribute to the newspaper for many additional years as a reporter, columnist, and blogger. She lives in McLean, Virginia, where she practices what she preaches: wearing sunscreen, eating broccoli, and getting at least 10,000 steps a day.

Constantine von Hoffman is a business and financial writer. For the past 25 years, he has worked for CBS News, Inc. Magazine, and The Boston Herald, among other news outlets. His writing has appeared in many publications, including the Harvard Business Review, Sierra Magazine, and The Boston Globe.

All publication rights reserved. None of the material in this publication may be reproduced in any form without the express written permission of CAPTRUST: 919.870.6822. ÂŠ2016 CAPTRUST Financial Advisors. The opinions expressed in this report are subject to change without notice. This material has been prepared or is distributed solely for informational purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. CAPTRUST does not render legal, accounting, or tax advice. If you require such advice, you should contact the appropriate legal, accounting, or tax advisor. The information and statistics in this report are from sources believed to be reliable but are not warranted by CAPTRUST Financial Advisors to be accurate or complete. Performance data depicts historical performance and is not meant to predict future results.

A SMARTER FUTURE FOR SENIORS by kim painter

As chief innovation officer for AARP, the advocacy group for older adults, Terry Bradwell feels duty bound to try all the hightech stuff marketed to seniors these days. So, at 54, he’s an enthusiastic early adopter of the smart home. His Florida home is outfitted with cameras outside and all manner of sensors and connected devices inside. When he’s traveling, he can use an app on his phone to see what the front door camera sees. If someone rings the bell, he can answer it, with his voice seeming to come from inside. The same AT&T system controls the home’s heating and cooling systems, raises and lowers the window shades, and is capable of detecting a flood. Bradwell’s lawn is smart too: it knows when it needs to sprinkle itself.

Summer | 2016

And that’s just the big stuff. Bradwell also has a sensor on his keys that beeps when he searches for it on his phone. He has Amazon’s Echo, a voice-controlled internet hub and speaker that can do everything from play music to order an Uber ride or a pizza. And he’s tested Sen.se Mother, a set of motion sensors you can put on your pill containers or water bottles (to track their use) — or even in a willing spouse’s pocket (so you get a text when she walks in the door). Right now, Bradwell admits that a lot of this technology is more complicated to set up and use than many older adults might like. But make no mistake, he and other experts say: if your dream is to age in place — to stay safe, healthy, secure, and connected to the world, without moving out of your home — technology is going to be your friend. “Increasingly, these things are going to become not just cool and nice to have, but really imperative,” Bradwell says. They are also going to become easier to use and even more connected to one another, he says.

“Increasingly, these things are going to become not

And it’s not just oldjust cool and nice to have, but really imperative.” er homeowners who will demand all this Terry Bradwell Chief Innovation Officer, AARP connectivity, says Laurie Orlov, founder of Aging in Place Technology Watch. “Everybody wants seniors to be able to stay in their homes.” The best technologies will be win-wins for those seniors, their families, their healthcare providers, their insurers, and society at large, she says. Here are some of the areas in which the experts say technology will make the biggest differences …

Health If you are counting steps with a Fitbit, tracking your diet with a smartphone app, or communicating with your doctor’s office online, you have some inkling of the power of technology to support your health. But that’s just a taste of what’s to come. Imagine a wristband that detects dehydration, shoe inserts that detect an unsteady gait, or a toilet that tests your urine. All are real products in various stages of development. Many people already use devices that remind them to take medications via a text, email, or voice alert. Some devices dispense the correct pills on schedule. Forget to take a pill anyway? A family member may get an alert as well. Continued on page 6

Sen.se Mother is a “family of incredibly smart sensors that you can set to monitor whatever you care about,” including tracking household activities, temperature, sleep, and personal habits and routines.

Continued from page 5

And many healthcare consumers have already been introduced to telemedicine — electronic interactions with doctors, nurses, and other providers. Rural heart failure patients are attending group counseling sessions via video conferencing. Patients taking blood-thinning drugs are testing their blood at home, sending the results through a specialized device, and getting a call if their dose needs adjusting. Diabetes patients are getting diet and exercise advice through personalized text messages.

nightmare that should become less common as more of us wire up our lives. When our home motion sensors fail to detect us moving around as usual, someone is going to be alerted. Likewise, a fire or a gas or water leak will set off alarms not only in our homes, but on our loved ones’ smartphones. And when we’ve fallen and we can’t get up? The medical alert system that made that phrase famous in the 1980s — the Life Alert pendant — is still sold, but it has a lot of competition. Several companies now make pendants and wrist bands that summon help at the touch of a button, detect falls in or outside the home, and allow caregivers to track wearers via GPS.

Still, so-called personal emergency response systems have a persistent image problem, says Jean Anne Booth, an engineer based in Austin, Such interactions will only increase as an aging population Texas. For many people, “that big help button is socially stigmatizmakes ever greater demands on the medical system, says David ing,” she says. Her own mother, an 82-year-old Lindeman, director of the Center for Technology and Aging at the Public Health “You could be in the same room retired model, refused to wear one, she says. “So I called her up and said what if I could Institute in Oakland, California. and seeing someone only once make you a watch that looks good?” And remote care does not have to mean rea week. Or using technology, duced care, he says: “You could be in the same you might see them every day.” Booth, 54, and her mother, who lives in California, have been trying out Booth’s inroom and seeing someone only once a week. David Lindeman vention, the UnaliWear™ Kanega watch. One Or using technology, you might see them Director, Center for Technology and potential selling point: the watch talks and every day,” he says. “That could be equally or Aging at the Public Health Institute responds to voice commands. The user can more powerful.” call for help, get medication reminders, and In an ideal world, these technologies will reduce the time we all ask for directions. The watch also offers directions home if the wearer spend driving to and waiting for appointments — and keep us out is wandering off in an unfamiliar direction, a feature that might be of hospitals and nursing homes. welcomed by someone in the early stages of dementia.

Safety and Security “I had a neighbor who died last year and was not found for a month,” Orlov says. “That is everyone’s nightmare.” But, she says, it’s a

Summer | 2016

Of course, many of us already carry around a lifesaving communications device. It’s called a smartphone. At least one company, GreatCall, offers simplified smartphones as well as basic alert devices.

The UnaliWear™ Kanega (left) is a stylish, voice-controlled smart watch that can provide emergency assistance, fall detection, directions, and medication reminders. GreatCall’s Splash (right) is “a mobile urgent response device” that provides GPS tracking, access to doctors, nurses and emergency services, and fall detection.

Transportation The future will be about self-driving cars, at least according to Alphabet (formerly Google), the company in the vanguard of that technology. But when that future will arrive — whether it’s five or fifty years from now — remains a matter of debate. Not in dispute is the fact that many people lose their independence when they stop driving. Orlov, for one, is skeptical that baby boomers (now ages 52 to 70) will be clamoring for cars they cannot steer and accelerate any time soon. “These are people who love driving cars,” she says, and are still buying plenty of them. She points to industry reports showing people over age 50 buy more and fancier cars than younger people. The good news is that the technologies that make self-driving cars thinkable, including automatic braking and other crash-avoidance systems, are making driving safer for younger and older humans alike, Orlov says. And for those who can no longer drive safely? App-based services such as Uber and Lyft are making a major effort to market their ride services to seniors. In New York City, a Lyft pilot program ferries seniors to medical appointments but does not require the use of a smartphone — still a barrier to some older adults. Both companies and some of their smaller competitors offer additional services for people who need special assistance.

Connection People need people. “The data is very clear that reduced contact with friends and family leads to depression and to an increase in mortality and (illness),” Lindeman says. And, as any grandmother with a Facebook account knows, it can be rewarding to connect with friends and family online. But not everyone is connected. As of 2014, most adults over age 65 did not have smartphones or tablets, most were not using social media, and 41 percent were not online at all, according to the Pew Research Center. There were big differences, though, by income, with 90 percent of those with household incomes above $75,000 going online. And there were telling differences by age. Nearly 75 percent of 65- to 69-year-olds were using the internet versus just 37 percent of those over age 85. That connectivity gap has inspired the launch of simplified devices aimed at the oldest adults. For the past two years, Joan Schissel, 84, of Ossian, Iowa, has been using one, a tablet computer called the grandPad®. It comes preloaded with easy-to-use apps for voice and video calls, email, photo sharing, games, and music. Family members get smartphone companion apps to stay in touch. Schissel, who had never used a computer, says she uses the tablet every day. She communicates with and looks at photos from many of her 10 children, 21 grandchildren, and 17 great grandchildren. “There’s nothing to it,” she says. “Just press a button or a picture and you get whatever you want.” (Full disclosure: One of Schissel’s sons-in-law is the co-founder of grandPad.) Continued on page 8

grandPad® (left) is a “simple, smart, and secure tablet for seniors” that allows them to make phone and video calls, send voice emails, check the weather, play games, and view family photos. Joy for All Companion Pet cats (above) from Hasbro have fur that looks and feels real (available in three colors), vibrate and purr when petted, and respond to hugging and motion.

Continued from page 7

But in the future, not all connections will be with fellow humans. Robots and virtual assistants — such as Apple’s Siri — will be configured to assist older adults at home. Even pets will go robotic. Some nursing homes already offer residents cuddle time with a $6,000 robotic seal named Paro. And Hasbro has just introduced Joy for All, a $100 robotic cat for seniors.

Potential Downsides

cabinet as a way to say ‘hi,’” she says. “Sometimes he would walk by the cabinet and open it just to say ‘hi’ to me in the middle of the day.” A little reciprocity also goes a long way, Fike says. While she routinely tracks her parents’ whereabouts with a feature on her iPhone, they track her too, she says. “My dad gets a kick out of seeing where I am each day.” While Fike says she can’t imagine a family in which such interactions replace phone calls and visits, “technology is not going to change a good daughter into a bad daughter or a bad daughter into a good daughter.”

OK, you might ask, but what’s lost when our parents or we are left Rita Libla, 80, of Yuba City, California, says the GreatCall emergenalone with robot cats and digital nurses? And what about privacy? cy alert pendant she wears, whether she’s at home or out driving, is After all, much of the emerging technology involves some kind of monitoring. “Intuitively, most people tracked by her grown children and that’s don’t like to feel that they are being fine with her. “To me it’s a comfortable “What happened was that suddenly, my watched or monitored,” says the feeling. It’s not an invasion of privacy. dad thought of opening that cabinet as a I just think it’s a good thing that they AARP’s Bradwell. Concerns about way to say ‘hi,’” she says. “Sometimes he privacy and the human touch need to know where I’m at.” be part of any conversation about po- would walk by the cabinet and open it just Of course, we are not just worried to say ‘hi’ to me in the middle of the day.” tential benefits, he says. about what we are sharing with our When the right conversations happen, families. We worry about what we Katy Fike Co-founder, Aging 2.0 the results can be surprising says Katy might inadvertently share with the Fike, co-founder of Aging 2.0, an orgaworld. In a fully wired life, “those sensors are always on, and you are trusting what is happening with all nization that connects tech start-ups with senior consumers and the senior care industry. She recently tested some sensors in the home of of that data,” Bradwell says. But, he says, the reality is that we are her 80-something parents during several weeks when her dad was exposing ourselves to some risk every time we swipe a credit card or home alone. They had agreed that a sensor on the cabinet where he turn on a smartphone. “Your location is being tracked all the time, and you have to consider what the value is to you,” he says. Over keeps his coffee would send her a signal when he was up for the day. “What happened was that suddenly, my dad thought of opening that time, he predicts, we will worry less about the downside.

Summer | 2016

BUILDING A SECOND ACT

Down on the Farm by constantine von hoffman

Inspiration comes in the strangest forms sometimes. For Andrew Crush it was in the form of a pig and some poisonous snakes. Thirteen years ago Crush, 40, bought a house and 10 acres of land in the small northern Virginia town of Lovettsville, where he works as a paramedic. Working for the fire department meant 24 hours on and then 48 hours off, which left him with a lot of time on his hands. Crush is not someone familiar with the idea of sitting still, so he was always busy with a lot of what he calls hobbies. Because he and his wife Liz weren’t very happy with the quality of meat they found in nearby stores, one of those hobbies became raising chickens and goats. The chickens weren’t too hard, but the goats were having a rough go of it. “We were grazing a bunch of land with the goats, and we started having problems with copperheads and some rattlesnakes,” he says. Continued on page 10

Continued from page 9

Like most of us, Crush had never had to get rid of snakes before. He quickly discovered they aren’t like other pests: Not only are they deadly, they’re persistent too. You can’t just lay out some traps or poison or call in an exterminator. After talking to the Virginia Department of Game and Fish and nearby animal control officials, he also found out no one else knew how to get rid of them either. “Then I ran into this old timer named Grady Parker who I’d grown up knowing,” he says. “He told me that a hog would solve our snake problems. I didn’t really understand how that was relevant to it. So he said, in a real North Carolina drawl, ‘Snakes to a hog is like cupcakes to a fat kid.’”

SPRING HOUSE FARM Spring House Farm consists of several owned and leased properties in Loudoun County, Virginia, totaling more than 400 acres. Its mission is to operate a sustainable and ecologically friendly farm dedicated to providing the finest foods that its earth can naturally produce. The farm is family run because Andrew and Liz believe in teaching their children what hard work, determination, and creativity can do for them and their family. The Crushes’ Spring House Farm raises a multitude of products that include pasture-raised and forest-finished pork, grass-fed beef, meat goats, rabbits, and honey. Of the three varieties of pork Spring House offers, the Ossabaw receives the most attention due to its unique flavor stemming from its appetite for acorns. The Ossabaw pig received its name from Ossabaw Island, Georgia. In addition to these efforts, the Crushes maintain a blog of articles and recipes related to their farm-to-table efforts and community supported agriculture programs. They also partner with a French-trained master chef, butcher, and charcutier from Baltimore’s Four Seasons Hotel and host regular classes in whole-animal butchery for foodies and restaurateurs at a butcher shop located on the Spring House Farm property. www.springhouse.farm twitter.com/SpringHouseFarm www.facebook.com/SpringHouseFarmVA 10

Summer | 2016

Crush didn’t believe Parker at first, and who can blame him. In a fight between a pig and a rattlesnake—whose venom can kill a person— most of us would pick the snake. We’d be wrong. Turns out the only

place a snake can bite a pig and do it any harm is in what would be its armpit, if pigs had arms. Everywhere else the fatty tissue prevents the venom from getting into the blood stream. So Crush got himself a pig, and it went to town on the snakes just as Parker said it would. With the snakes gone, the couple now had a pig they could either keep for no real reason or use to save a lot of money on their grocery bills. In the fall, they butchered it and immediately saw pork like none they had ever seen before. It had a lot more fat than what you would get in a grocery store package, and it wasn’t white; it was a deep pink color. They cooked up some pork chops and the flavor was incredible. That wasn’t just their opinion either. Their friend Jason Lage, chef at Market Table Bistro, a farm-to-table restaurant in Lovettsville, tried a couple of pork chops and immediately ordered two pigs for next year.

heritage breed, not one of the newer breeds designed for high-intensity pig farming, so the color and fattiness is just what you’d find on an old-fashioned pig. The other thing that made it different was what it was fed, and that doesn’t mean the snakes, which were a minor part of its diet. The area the pig grazed in is heavily wooded and has a lot of oak and chestnut trees, so it ate acorns and other natural forage. Supermarket pork, by contrast, is fed corn and soya, which don’t add flavor to the meat. After doing some research, Crush found out his pig ate the same things the renowned black Iberian pigs of Spain and Portugal eat. The cured meat from those pigs is called jamón ibérico. It is to ham as Kobe beef is to ground chuck and can sell for more than $100 per pound. Continued on page 12

What made this pork so different than what is sometimes called “the other white meat”? First is the pig’s breed. The Hampshire is a

Continued from page 11

Crush knew he had something special here, and he and his wife Liz wanted to make the most of it. They founded Spring House Farm in 2004 to sell their pork and meat from other livestock. Thanks to his chef friend they knew about selling to restaurants. Even as Andrew worked on expanding those sales, he knew that alone wasn’t going to be enough. At first he thought about selling via farmers’ markets, like many small farms do. However his job at the fire department only gives him two weekends off a month, and farmers’ markets require a big time commitment. They also can be risky in terms of sales; a rain storm can mean no customers and no sales. “We’d spend two days on the farm and three days on the road going all over the place trying to sell the different products, and it just wasn’t paying off,” he says. “Way too much in fuel and way too much time away from the farm trying to get these items sold.”

That’s why he got involved in community supported agriculture (CSA). With CSAs, consumers sign up for a season and pay a set amount each week in return for a certain amount of meat, poultry, eggs, produce, or vegetables from a local farmer. At first, he saw it just as a way to grow his customer base, but he soon realized it could help him in other ways as well. While restaurants are still the Crushes’ main target customers, selling to them is “a balancing act of first having enough animals and then having enough customers,” he says. He has to raise enough animals so that he can deliver to them consistently. “But if a restaurant backs out or if we had ramped up production and did not have a customer, then we’d have product and we had to do something with it,” he says. “In other words we’d have to either eat it or find another outlet to be able to move that stuff.” The CSA is that other outlet.

Crush knew he had something special here, and he and his wife Liz wanted to make the most of it. They founded Spring House Farm in 2004 to sell their pork and meat from other livestock.

Summer | 2016

Continued on page 14

WINNING AWARDS Andrew Crush of Spring House Farm was recognized as one of Americaâ€™s Best Young Farmers and Ranchers for 2016 by DTN/The Progressive Farmer at its annual conference and awards ceremony in December. Crush was specifically recognized for his deep commitment to his production practices, for bringing rare meats to fine dining, for knowledge of his market, and for his direct-to-consumer engagement and approach. In its sixth year, this annual award distinguishes five farmers or ranchers who are among the best of their generation. Recipients of this award are recognized for their ability to embrace the future of agriculture and develop the technical and managerial skills to build their own successful businesses. DTN/The Progressive Farmer, founded in 1886, is the leading agricultural information services provider to the North American corn, soybean, and cattle complex.

Continued from page 12

Even after 12 years, Spring House Farm is still very much a work in progress. Cash flow is the biggest problem. To that end, Andrew and Liz hope to open a butcher shop. They are also considering if they should bring in investors. “It’s constantly a battle with us financially,” he says. “You do well for a while and get a couple good customers, and then you end up with a three-foot snow storm or a broken machine or something like that. We’re getting there, but it always seems like it takes longer than you hoped.” Crush has no intention of giving up his job with the fire department, but he knows it won’t last forever. “By the time I’m 55 years old, I will probably not feel much like riding a fire truck,” he says. “When I’m at that age, I need to have an additional nest egg, and this business is going to be my nest egg.” To that end, he puts all the money he makes from the farm back into it. His time as a paramedic has definitely shaped his view of the future—he knows nothing is certain, and you have to expect bad things to happen.

“When I’m at that age, I need to have an additional nest egg, and this business is going to be my nest egg.” Andrew Crush Owner, Spring House Farm

Summer | 2016

“There’s risk in everything you do,” he says. “I’ve seen people that live to be a 100 years old, and I’ve seen people that, driving down the road at 25 years old, get hit by debris and die. You never truly know what’s going to happen. But one thing that I learned in the fire department very early on is that there are a lot of things you can’t control, and things are going to go bad. To me it’s not really about if it went bad, it’s how can you recover.” For additional photos of Spring House Farm and past Second Act articles, please visit the Resources section at captrustadvisors.com.

TAI CHI FOR BALANCING

BODY, MIND, AND LIFE by nanci hellmich

iStock.com/Mawardibahar

Tai chi, a mind-body program that combines ancient Chinese martial arts moves with meditation, is shaping up to be a modern-day prescription for better health. The gentle, graceful exercises increase balance, flexibility, range of motion, strength, and mobility, while reducing stress and improving mood. Research shows tai chi can lead to improvements in the heart, bones, joints, nerves, muscles, immune system, and mind, says Harvard assistant professor Peter M. Wayne, PhD. Wayne is co-author of The Harvard Medical School Guide to Tai Chi, along with Mark L. Fuerst. “It’s gaining traction with many people today because of its potential benefits to physical and mental health,” says Wayne. Tai chi has long been considered “meditation in motion,” and now some are calling it “medication in motion.” Veteran exercisers have come to appreciate it. Jean Duffy, a CAPTRUST financial advisor in West Des Moines, Iowa, works out with gusto, whether it’s playing basketball, doing aerobics, or walking. A few years

ago she and her husband, Brad Ulrichson, bought several tai chi DVDs and started doing the workouts in their finished basement. “Normally, you think exercise has to be fast to get a workout, but tai chi has slow, methodical movements to enhance your muscle control and balance. I’d definitely say it helped with my balance, and I get a good workout,” she says. Duffy found it was relaxing and stress relieving, so she thinks it would be a perfect activity for 10-minute breaks in the office: “It gets you moving and your muscles working without making you sweat.” Continued on page 16

Continued from page 15

Learning the rhythmic moves can be a bit daunting. Beryl Ball, a CAPTRUST financial advisor in Richmond, Virginia, took tai chi with a good instructor at a local community center several years ago. “I enjoyed trying the movements,” she says, “but I don’t think they’re easy. Sometimes doing things that are slow is more demanding of your muscles than doing things that are fast.” She found the classes a little too slow-moving, so she went back to faster-paced Zumba classes. Still, Ball may try it again. She thinks the tai chi movements and the breathing “are wonderful for you.” Tai chi is a good addition to other exercise routines, says Richard Cotton, an exercise physiologist and national director of certification for the American College of Sports Medicine. “You can always take an exercise walk and lift weights, but there is something gained with tai chi that is not available with other exercises,” he says. It helps reduce stress and promote relaxation because, when you do it, you need to be present and not fretting about the troubles of the world, he says: “For people who are under a lot of stress, the movements can help them relax and focus. It’s a way to center themselves and get their life back.”

“I enjoyed trying the movements, but I don’t think they’re easy. Sometimes doing things that are slow is more demanding of your muscles than doing things that are fast.” Beryl Ball Vice President, Financial Advisor

People can build aerobic capacity and strength with tai chi, so they have an easier time doing other physical activities, says Wayne, research director at the Osher Center for Integrative Medicine, jointly based at Harvard Medical School and Brigham and Women’s Hospital in Boston. “We call it a gateway exercise because after people start doing tai chi, they become more toned and confident and are more likely to do other exercise.” The movements are low impact and low stress on the body, but high in benefits, adds Li Li, a research professor in the School of Health and Kinesiology at Georgia Southern University in Statesboro, Georgia. “We don’t follow the philosophy of ‘no pain, no gain.’ Tai chi doesn’t cause any pain but provides lots of gain.” Li does tai chi himself and studies its health benefits. His research publications show that the exercises can improve gait and balance in people who have peripheral neuropathy, a condition characterized by damage to sensory nerves in the feet and legs that often causes burning sensations, numbness, and pain.

Summer | 2016

The other potential health benefits are wide ranging. There are more than 1,200 peer-reviewed scientific studies of tai chi, Wayne says. He says research indicates that it: • Improves balance and reduces falls in older healthy adults, as well as adults with chronic balance problems related to Parkinson’s disease or stroke. • Reduces pain and increases mobility of people suffering from knee osteoarthritis and lower back pain. • Can help manage blood pressure and cholesterol. • Helps people with chronic heart failure have a better quality of life. In other words, they have an easier time performing activities of daily living. • Makes it easier to exercise and breathe for patients with chronic obstructive pulmonary disease (COPD). • Offers symptom relief for people with fibromyalgia, a disorder characterized by widespread musculoskeletal pain accompanied by fatigue, sleep, memory, and mood issues. Tai chi may also improve cognitive function, since many studies suggest that learning new motor skills, especially ones requiring focused attention, leads to cognitive changes in adults, Wayne says. Most people who practice tai chi do it in large part for a greater peace of mind, which comes from being mindful and focused during the exercise, says Wayne, who is also a tai chi instructor. He begins his classes by having people stand in a circle and inviting them to be aware of what’s going on in their bodies at that moment. He tells them to allow themselves to fully arrive in the present. Continued on page 18

iStock.com/btrenkel

Tai Chi Terms Explained Tai chi derives its name from the concept of yin and yang, also known as the tai chi symbol. Yin and yang is a central concept in traditional Chinese medicine, philosophy, and science, and it is one of the deepest pillars of Chinese culture. The yin-yang symbol illustrates two complementary polar opposites that create a dynamic, balanced, and interdependent whole. Tai chi training embodies this yin-yang concept at many levels. At the most obvious physical level, tai chi is an exercise that aims to strengthen, stretch, balance, coordinate, and integrate the left and right halves of the body, the upper and lower halves of the body, and the extremities of the body with the inside or core. At a more subtle level, tai chi integrates body and mind. Body movements are coordinated with rhythmic, conscious breathing and multiple cognitive and emotional components, including focused attention, heightened self-awareness, visualization, imagery, and intention. Successful yin-yang integration in tai chi is reflected in the seamless connection of graceful movements, with one flowing into another, as well as a sense of focus, calmness, and peacefulness. The character for Qi is different from the “chi” in tai chi. Qi refers to vital energy, information, breath, or spirit. Qi is the first part of a diverse set of mind-body practices called qigong. Broadly speaking, qigong translates as the cultivation and mastery of qi. Some styles of qigong are oriented more toward health and spirituality, in which you sit and do breathing and meditative exercises. Other styles are more vigorous and are designed to enhance your martial art skills. Most people think of tai chi as a form of qigong because it cultivates, moves, and helps manage qi.

Continued from page 17

After a minute or two of standing, he has his class begin with the simplest movement, tai chi pouring, which is shifting the body from side to side with awareness. From there the routine may include movements with names such as “wave hands like clouds” and “grasp the sparrow’s tail.” There are different tai chi styles, including the Chen, Yang, Wu, Hao, and Sun. Each style contains different choreographed routines with movements and postures, but all share common principles, Wayne says. Some of the tai chi classes and videos offered today “are a type of fusion of classic tai chi and other exercise forms,” Cotton says. “You don’t need to subscribe to or learn much about tai chi’s roots in Chinese philosophy to enjoy its health benefits, but these concepts can help make sense of its approach.” If you are thinking about try- “You don’t need to subscribe to or learn ing it, Cotton suggests finding much about tai chi’s roots in Chinese a good instructor who will philosophy to enjoy its health benefits, teach you a beginning level of but these concepts can help make the traditional moves and forms. “There are different levels, sense of its approach.” but it doesn’t have to be impossibly Richard Cotton complex. There are beginner levels.” Exercise Physiologist, Beginner videos may work too, but it’s alNational Director of Certification, ways good to learn the proper form from American College of Sports Medicine an instructor and then have your movements checked, he says. “It’s never too late to try tai chi,” says Wayne. His research studies often include people who are in their 70s, 80s, and 90s. Tai chi not only provides people with physical activity and peace of mind, but “it’s also a great way to meet and spend time with others committed to taking care of their own health.”

Summer | 2016

iStock.com/MalcolmB2

TAI CHI | TIPS FOR GETTING STARTED TALK TO YOUR DOCTOR. While tai chi is a gentle form of exercise, if you have a health condition, talk with your healthcare provider before getting started.

CONSIDER WATCHING A TAI CHI CLASS OR A VIDEO. Starting tai chi can be a bit intimidating for a beginner. Visit and observe a nearby class first to get a better sense of what to expect. Or check out a beginner video to get familiar with the movements. You can find dozens of beginner tai chi videos on iTunes or as DVDs on Amazon. But, while videos can give you a taste of what to expect, you’ll want to take a class to ensure you are doing the movements safely and correctly.

SELECT A CLASS AND INSTRUCTOR YOU ARE COMFORTABLE WITH. It’s important to find a class and instructor you can identify with. Some instructors choose forms that accentuate the roots of tai chi, centered around martial arts, whereas others focus on health benefits. Some forms are long strings of movements, while others are more abbreviated and focus on meditation and breathing. Ask a trusted source—such as your healthcare provider or a nearby hospital— to recommend a tai chi instructor. Find out about the training and experience of any instructor you are considering.

WEAR LOOSE CLOTHES. Tai chi is all about movement. You will want to wear loose clothes so that you have full range of movement. You may or may not want to wear shoes, but if you do, they should be light, thin, and prevent slippage.

PRACTICE, PRACTICE, PRACTICE. Most beginning tai chi programs and interventions tested in medical research last at least 12 weeks and include instruction once or twice a week and practice at home. By the end of that time, you should know whether you enjoy tai chi, and you may already notice positive physical and psychological changes. Like any other physical skill, tai chi takes practice, so give it ample time to take root.

TO LEARN MORE • The Harvard Medical School Guide to Tai Chi: 12 Weeks to a Healthy Body, Strong Heart, and Sharp Mind by Peter M. Wayne, PhD, and Mark L. Fuerst • Tai Chi for Beginners, www.beginnerstaichi.com • Tai Chi for Health Institute, taichiforhealthinstitute.org • Tai Chi Health, taichihealth.com

WHEN YOUR AGING PARENTS

NEED ESTATE PLANNING by michael kemmy Elder Law Specialist Conrad Trosch & Kemmy, P.A.

Emily and Brad are a married couple in their late 40s with a couple of teenage children. Emily’s parents, Joe and Sarah, are in their 70s and have three adult children, Emily and two sons. Emily is the oldest, and she lives in the same town as her parents. Her brothers both live out of town. Joe and Sarah have always been independent and have not shared their financial information with their children. Recently, Joe has missed paying a few bills — something uncharacteristic of him — and he has started showing other signs of dementia. Sarah is in fair health, but Joe has always handled their finances. Emily has become concerned about her parents’ future as she realizes she will be the one taking care of them when they can no longer care for themselves. She suspects that, if they have wills and powers of attorney, they were done many years ago. She is worried about what would happen to her mother if her father has to go into a nursing home. She’s not sure what to do, but one of her friends suggested that she talk to an attorney.

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All Too Familiar This is an all-too-familiar scenario in my position as a practitioner of elder law. I can’t tell you how many times a month I get a desperate phone call from an adult child saying “Dad has dementia, and I need a power of attorney.” Usually the dementia has progressed to the point that Dad no longer has the mental competence to sign a power of attorney, a will, or any other legal document. At that point, it’s too late for a power of attorney to be the solution to Dad’s failing capacity. He may need a legal guardian, which involves a costly and public court proceeding. Given Dad’s dementia, this client needs to act soon if he is going to be able to make an effective plan to address his parents’ needs and concerns. Of course, it doesn’t have to be this way. With estate and financial planning — as with many problems that arise in life — there are two options: advance planning and crisis planning. It should come as no surprise that your parents will likely achieve a better outcome for themselves with advance planning. If you are concerned about the state of your parents’ estate planning — or simply want to get ahead of the curve — one of the most important roles you have could be helping them understand that they should seek professional advice.

Starting the Conversation As people age, their financial situations change, as do their goals, preferences, and outlooks. Too often, however, they do not update their financial or estate plans to match the current situation. So, even if your parents are hesitant to discuss the details of their financial and estate plans with you, you can suggest that they talk confidentially with financial and legal professionals who can guide them through the process of updating their documents. Be wary of listening to advice given by well-meaning friends and relatives. Planning for elders is very fact specific, so what may have worked for someone else may not be right for your parents. You should also be aware that laws in these cases vary widely from state to state. A professional will ask questions and bring up

issues that you or your parents may not have thought about — or perhaps were uncomfortable discussing — but that need to be addressed.

Gather Information Your parents should gather the pertinent legal and financial information their planners will need to create a plan that’s right for them. Ask them if they want you to help them put this information together. They will need to identify and locate their existing estate planning documents, if they have any. They will need a list of their assets, including values and how each asset is titled (his, hers, or joint). Each parent should I can’t tell you how many times also itemize the source in a month I get a desperate and amount of his or her monthly income.

phone call from an adult child

Your parents should saying “Dad has dementia, and I also gather medical inneed a power of attorney.” formation, such as current medications, names of doctors and other healthcare providers, and health insurance information. This information will be important in the future to you and your siblings, as well as any other caretakers or legal professionals.

Estate and Asset Protection Planning Ordinary estate planning is important for everyone. It’s even more important for the elderly. These are five essential estate planning documents that each of your parents should have. They are: • Last will and testament. Very simply, a will is a legal document that directs how your property will be distributed after you die. In your will, you designate a person you trust to manage the distribution of your assets. You can also create a trust in your will for the benefit of your spouse or children. If you do not have a will, the state will determine how your estate is distributed.

Continued on page 22

Continued from page 21

• Durable power of attorney. A durable power of attorney gives someone else the authority to act on your behalf and make legal and financial decisions should you become incapacitated. • Healthcare power of attorney. This document, also known as a healthcare proxy, enables you to designate a person to make medical decisions on your behalf in the event you become unable to make them yourself. • Living will. A living will, sometimes called an advance healthcare directive, specifies your wishes for end-of-life care in writing. It can address such issues as whether you want to be resuscitated if your breathing or heartbeat stops, or whether you want to be kept alive through artificial respiration or feeding.

Beyond estate planning, depending on your parents’

• HIPAA authorization. A federal law called the Health Insurance Portability and Accountability Act (HIPAA) sets strict rules on who can look at your medical records or receive your medical and health information. A HIPAA authorization allows you to name a person to receive your medical information from your healthcare providers or wishes your health insurance company.

and their financial situation, asset protection planning may be appropriate for them.

These basic documents will allow your parents to state how they want their assets to be distributed upon death, who will be in charge of administering their estates, who will make financial and medical decisions for them when they are not able to make their own decisions, and what their end-of-life medical choices are.

Beyond estate planning, depending on your parents’ wishes and their financial situation, asset protection planning may be appropriate for them. An elder law attorney can give them advice and make suggestions for protecting their assets in the event one or both of them need to go to a nursing home. Without advance planning, your parents may have to pay their own way in the nursing home until their assets are nearly exhausted. At that point, they could apply for Medicaid benefits. While there is some protection for a spouse who is still living at home, life could become very difficult for that parent if most of their other assets were used up. This can be a sensitive and scary topic to discuss with them because no one wants to go to a nursing home. However, because our population is aging and we are living longer, more people do, in fact, end up living in nursing homes. Asset protection planning can’t change that, but it may be able to make life more bearable for the parent living at home. Remember, advance planning is much more effective than crisis planning.

Summer | 2016

Make Sure Your Credit Score by nanci hellmich

You may have worked hard for a golden credit score, but it can get tarnished in unexpected ways. Financial experts have seen this happen to clients across the country. Trae Cole, a CAPTRUST financial advisor in Raleigh, North Carolina, has a client whose divorced mother ended up deeply in debt after her husband spent a lot of money at the end of their marriage. She was 70 years old and retired, and she needed to go back to â€œOnce your credit is blemished, you have to work to restore her credit score so she could rent or buy a home. She consulted with a credit counselor to figure out work hard to get it back. Even if you pay off how to do it. Once your credit is blemished, you have to work hard to get it back, Cole says. Even if you pay off your debt, it takes time for those negative items to come off the credit report. Continued on page 24

your debt, it takes time for those negative items to come off the credit report.â€? Trae Cole Vice President, Financial Advisor

Continued from page 23

James Valmonte, a CAPTRUST financial advisor in Riverside, California, has a few clients who co-signed loans with adult children or other family members. When the other parties failed to fulfill their obligations, his clients’ credit scores dropped. They ended up making payments or paying off the loans, while also resolving their own credit issues. “Credit scores matter,” says Valmonte, “and can impact many aspects of clients’ financial lives.” Everybody should care about their credit report and their credit score, says Bruce McClary, a spokesman for the nonprofit National Foundation for Credit Counseling. But only about a third of people reviewed both their credit reports and credit scores during the past year, according to a 2015 survey of 2,017 adults conducted for the counseling group. Among those who got their credit scores, about a third did so as part of managing their personal finances; a third did it out of curiosity, and a fourth did so because they were considering a major purchase, or apartment rental, or were applying for credit or insurance. McClary advises people to go to AnnualCreditReport.com to get a free copy of their credit reports from each of the credit reporting companies: Equifax, Experian, and TransUnion. You can get them every 12 months or stagger them, and you should immediately dispute any errors you find with the appropriate credit agency, he says. Checking your credit reports regularly can help you catch problems that need your immediate attention, such as identity theft, credit fraud, or credit card accounts that you thought were closed but actually weren’t, McClary says. “If someone hijacked a credit card account that you thought you had closed, he or she could have a field day using that account and charging it up to the max without you even knowing it. This kind of activity would be like a boat anchor bringing your credit score down to the basement.”

“Credit scores matter and can impact many aspects of clients’ financial lives.” James Valmonte Vice President, Financial Advisor

Summer | 2016

Staying on Top of Your Credit Report There are plenty of reasons to make sure you have a good record. Mortgage companies, banks, credit card issuers, auto lenders, credit unions, and finance companies look into your credit reports when you apply for loans and other credit. They are trying to determine if you qualify for a loan, how much you can borrow, and an appropriate interest rate. Potential lenders and others want to know how you manage your financial responsibilities to those you owe money, McClary says. The reports and scores help them make a risk assessment if they are considering extending you a line of credit. An affordable interest rate is something everyone “Even if you get a loan and plan to power-pay the should strive for, he says: “Even if you get a loan heck out of it, if there is a period of time where you and plan to power-pay the heck out of it, if there is a period of time where you had had to drop back and rely on the minimum payments, to drop back and rely on the minimum that low interest rate is going to make a difference.” payments, that low interest rate is going to make a difference.” Access to your credit report isn’t limited to creditors. There are others who have an interest in what’s reported, including rental property management, debt collectors, insurance providers, and even potential employers.

Bruce McClary Spokesman, National Foundation for Credit Counseling

The information in the credit report determines your credit score. Agencies charge a fee for their credit scores, but there are ways to get your credit scores for free. In fact, many credit card companies offer free access to your credit scores as a benefit. In some cases, they will provide it to you on your monthly billing statement, McClary says. The commonly used FICO Scores, created by the Fair Isaac Corporation, range from 300 to 850. Exactly how FICO and others, such as VantageScore, calculate credit scores is proprietary information, McClary says. The folks who do this don’t want to make their math public. That’s giving away the secret sauce. But, for consumers, the bottom line is this: The higher your credit score, the more likely it is that you’ll get the best rates for mortgages, car loans, and credit cards, he says. Continued on page 27

An Inside Look at Your FICO® Score FICO calculates its scores from information in your credit report, which is grouped into the five categories listed below. The score considers both positive and negative information on your credit report. The score also includes public record and collection items. These events are considered quite serious, although older items and items with small amounts will count less than recent items or those with larger amounts. Negative factors include bankruptcies, which will stay on your credit report for seven to ten years, depending on the type, as will foreclosures, lawsuits, wage attachments, liens, and judgments.

NEW CREDIT

10%

CREDIT MIX IN USE

10%

Research shows that opening several new credit accounts in a short period of time represents greater risk. This is especially true for people who don’t have a long credit history.

YOUR PAYMENT HISTORY

35%

FICO Scores consider your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans.

The first thing any lender wants to know is whether you’ve paid past credit accounts on time. This is one of the most important factors in a FICO credit score. Account types include credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans.

LENGTH OF CREDIT HISTORY

15%

If you have two or more 30-day-late payments on your credit report at the same time, expect your score to take a hit for 12 to 24 months, says mortgage broker David Damaré: “Any late payment will increase the cost of borrowing in the near term. And the higher your credit score, the bigger the drop.”

In general, a longer credit history increases your FICO Scores. However, even people who haven’t been using credit long may have high FICO Scores, depending on how the rest of the credit report looks.

AMOUNTS OWED

30%

However, having no late payments in your credit report doesn’t mean you’ll get a perfect score. Your payment history is just one piece of information used in calculating your FICO Score.

Owing money on credit accounts doesn’t necessarily mean you’re a high-risk borrower with a low FICO Score. But, when a high percentage of a person’s available credit has been used, this can show that a person is overextended and is more likely to miss or make late payments.

Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Summer | 2016

Continued from page 25

Recovering From Credit Issues David Damaré, a licensed mortgage broker in Raleigh, North Carolina, has worked with several wealthy clients who were preparing to finance homes, but when they pulled their credit reports, they were surprised that they did not have the highest credit scores and couldn’t qualify for the lowest interest rates. The reason: They had unknowingly missed a bill. In one case, the husband didn’t know his wife had opened a new retail credit card, so he didn’t pay the bill. When they discovered the missed payment on their credit reports, they paid it immediately. “Otherwise, they had excellent credit, so after several months their scores recovered,” he says. Teri Parker, a CAPTRUST advisor in Riverside, California, had two clients with excellent credit histories who bought investment properties before 2007—at the peak of the real estate market. Then the great recession hit, and property values tanked. They ended up selling their properties at significant losses in short sales. That lowered their credit scores, which meant that they didn’t qualify to refinance their homes. Instead, they carried mortgages with interest rates that were about 3 percent higher than the current rates, she says. These are people who have always paid their mortgages, credit cards, and other debts on time, she says. “It has taken them years to repair their credit histories.” It often takes time to fix a credit score, according to myFICO.com. For instance, paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

It often takes time to fix a credit score, according to myFICO.com. For instance, paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

McClary has a friend whose score tanked when he was in the middle of a divorce, and some bills didn’t get paid. Credit scores can take a nosedive during a divorce when one partner stops paying his or her portion of shared debts, McClary says. “It’s a perfect storm. You’ve got lack of communication, animosity, and a situation where some things may be done out of spite.” His friend has worked to improve his finances. “I went golfing with him a few weeks ago, and he told me how close to perfect his credit score was.” McClary doesn’t want his golfing buddy to get too wrapped up in having a perfect score: “In my 17-plus years working in the financial field, speaking with thousands of people and experts, I have yet to speak to someone with an 850, but I know they are out there.”

THE I N E L E G A N T by eric freedman

NARRATIVE

Explanations tidy up our lives. Assigning labels organizes everything from our garages to our computer files. Explanations provide justification, assign credit or blame, and help compartmentalize what causes certain events to occur. When Jordan Spieth finished his first nine holes at Augusta National on April 10, he held a five-stroke lead. He bogeyed the next two holes. The second came on the hardest hole on the golf course, so the result seemed justified. But when Spieth, a professional golfer with two major championships under his belt, hit two shots into fabled Rae’s Creek on the par-three 12th hole, TV broadcasters, social media, patrons at Augusta, and living rooms around the globe sought explanations. After watching Spieth hit his second golf ball into the water, a dumbfounded three-time Masters-champion-turned-broadcaster Nick Faldo struggled to explain what he was witnessing, saying “[Spieth] turns and walks to the 10th tee … and we can hardly get our superlatives to mark this man’s incredible achievement, and then he goes bogey, bogey, and we don’t know what.”

“Buddy, it seems like we’re collapsing.” Jordan Spieth, Professional Golfer Said to caddie Michael Greller following a 12th-hole quadruple bogey that cost Spieth the 2016 Masters Tournament lead

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Two of our kids play competitive golf, and I know from being a spectator and occasional caddie that many variables can affect a golf shot. Some are external to the golfer (e.g., temperature, wind, moisture, and elevation). Others are caused by the golfer (e.g., shot strategy, swing speed, club path, heart rate, and commitment to the shot). This cursory list only scratches the surface of what can impact results, but these variables interact with the laws of physics to produce outcomes, whether birdie, bogey, or the dreaded “other.” Even players themselves may not know definitively what causes an outcome. Investment outcomes are also subject to these two conflicting forces: variable interaction and the need for explanatory narratives. Factors impacting a given asset class’s performance are nearly infinite. Take emerging market stocks, for example. A simplistic narrative that you may find in the headline of a popular publication may read something like “Emerging Market Stocks Decline on Currency Concerns.” While the headline satisfies our need for an explanation, it likely oversimplifies the cause. Emerging market stocks span many geographies, so a singular cause is unlikely. The reason currencies moved is also

uncertain. They, too, are subject to interacting variables that a simple headline cannot capture. In a world of shortened attention spans and bite-sized content, we may be oversimplifying at the expense of true causal understanding. In this Investment Strategy, we will explore what actually is — with little time spent on how we got here. So, first, let’s get the “how” out of the way. We have contended for several years that central banks’ desire to restrain borrowing costs to stoke economic activity and consumer spending has been a key market driver. We have shown the relationship between the U.S. equity market and the Federal Reserve’s balance sheet. We have also detailed how significant the Federal Reserve and other central banks have been in certain bond markets in which they are making purchases. Irrespective of whether you accept this narrative, price trumps all. Comparable to the popular golf phrase “there are no pictures on scorecards,” market values reflect all the variables that surround them. Let’s first take a look at the bond market. Continued on page 30

“The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them all make more sense.” Nassim Nicholas Taleb Mathematician, Philosopher, and Author

Continued from page 29

As you can see in Figure One, we have plotted current 10-year government bond yields from major economies and their ranges since the end of 2012 — almost three and a half years of data. Government bonds are considered the safest of yields, since they have lower credit risk than companies; governments have the power to tax whereas companies do not. They tend to be the starting point for many borrowing rates, like mortgage rates, so when central banks want to stimulate the economy, bond buying is a perceived effective tool. Most importantly, government bonds are the cornerstone of modern finance. They are the building blocks for all other asset prices, with U.S. Treasury bonds crowned as the vaunted risk-free rate. The U.S. government’s payment to creditors is a near certainty since the U.S. has both taxation powers and the world’s strongest military. Asset prices move up in risk and expected return based on what government bonds, specifically those issued by the U.S., yield. Two things stand out from Figure One. First, in and of themselves, global bond yields are extremely low. Lending to the U.S. government for 1.85 percent per annum for 10 years seems low. But that 1.85 percent appears juicy relative to Germany (0.15 percent) or the negative rates in Japan and Switzerland. Second, interest rates are either at or very close to their lowest levels, despite several years of economic healing since the financial crisis. Again, irrespective of the narrative behind how they arrived there, global interest rates are at historically low levels. Analyzing global stock market scorecards is a little trickier. Major stock market indexes provide some information, but the best scorecard is corporate earnings. Stocks represent a claim on a company’s bottom line, and equity markets reflect what investors

Figure One: High, Low, and Current 10-Year Government Bond Yields (since 2012) 4.5%

4.43%

HIGH CURRENT LOW

4.0%

3.74% 3.5% Australia

3.07%

3.03%

3.0% South Korea 2.5%

2.23%

2.30%

United States

United Kingdom

2.04%

2.0%

1.85%

1.80% 1.76%

1.63%

1.5%

1.44% 1.22%

1.0%

Germany

1.30%

0.92%

0.5% Japan

Switzerland

0.15% 0%

0.07% -0.13%

-0.14% -0.38%

-0.5%

-0.48%

Source: Bloomberg, data as of 5.31.2016

Summer | 2016

are willing to pay for those earnings. To be sure, stock prices can fluctuate (think of extremes during the dot-com era), but earnings are earnings. While many use forecast numbers, they represent expected earnings â€” not what will actually be posted. Earnings forecasts are just like expectations on the first tee: I think I may shoot a 75 today, but I will know for sure only after I play all 18 holes.

Earnings forecasts are just like expectations on the first tee: I think I may shoot a 75 today, but I will

Figure Two shows actual earnings by month for four major equity indexes since March 2000, more than 16 years of data. The S&P 500 represents U.S. stocks, the MSCI EAFE index represents developed market international stocks (mainly Europe, the UK, and Japan), the MSCI EM Index represents emerging market equities, and the MSCI World is a proxy for all global stock markets.

know for sure only after I play all 18 holes.

We see three key conclusions from this figure. First, earnings tend to trend in the same direction, emphasizing an interconnected global economy. Second, the only region that has reclaimed earnings levels achieved before the financial crisis is the U.S. Finally, earnings for all four indexes have been trending lower, not higher. Emerging and international developed markets show the steepest decline since their post-financial-crisis peaks. Note that for the U.S. equity market, dating back to the March 2009 equity market lows, the S&P 500 has rallied 232 percent over the past 87 months. Since 1928, bull markets have averaged 57 months in length and 165 percent in total return, so this equity market move has been bigger and longer than all but two others: the post-World War II period from 1949 to 1956 and 1990 to 2000, which ended with the dot-com bubble burst. Continued on page 32

Figure Two: Actual Earnings March 2000â€“May 2016 (in Dollars) $160

$120

$140

$100

$120 $80

$100 $80

$60

Emerging International (right)

$40

MSCI World (right) $20

S&P 500 (right)

$20 $0

$40

Developed International (left)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: Bloomberg

Continued from page 31

Setting aside the narratives for how we got here, markets reflect in the high yield bond market. Attractive investment options exist, bond yields at all-time lows, stagnant or falling earnings, and at but we remain steadfast. Given low bond yields, investors must least one major market in a lengthy bull market with few pullbacks ratchet down their return expectations. along the way. This is not the best setup I have never had the pleasure of meeting for investors already frustrated by low I have never had the pleasure Jordan Spieth, but as a golf parent and returns over the past three years. I wish occasional caddie, I remain impressed of meeting Jordan Spieth, but I could provide a more elegant synopwith his poise and sportsmanship sis, but looking at the scorecard offered as a golf parent and occasional following that Sunday’s events. When by bond yields and earnings, the curcaddie, I remain impressed with asked about what happened, Spieth prorent challenging investment milieu is vided his own narrative, highlighting his poise and sportsmanship the inelegant truth. that he “just put a bad swing on it at the following that Sunday’s events. While we continue to forecast a low-rewrong time” and had a “lapse in concenturn environment, we do see some tration.” His willingness to speak with positives in the charts shown, particularly with respect to global reporters immediately after the round, stay for the awards presenequities. Japan’s demographic challenges will be hard to combat, but tation, and give additional interviews provides a clinic in honesty, European and emerging market earnings have considerable room forthrightness, and dignity. The outcome was not what the old soul for improvement. In other words, companies’ better days are likely that is Jordan Spieth wanted, but his post-round character sets an ahead of them, not behind them. example for all narratives; we can only hope to follow his lead. We respect the chance for a recession in coming years, but expect that the same central banks that have driven asset prices will remain accommodative. After several years of concerns about emerging markets, we are starting to see evidence of structural improvement. We also note that energy market disruption has led to opportunity

Summer | 2016

To that end, while we wish the current capital market setting were more robust, we remain in an inelegant world with low expected returns. Nonetheless, we are seeing opportunities and working hard to find more, paying attention to risks and fees.

MARKET INDEX PERFORMANCE

(as of 5.31.2016)

Commodities 8.6% Real Estate

U.S. Stocks

U.S. Bonds

3.6%

3.5%

Emerging Market Stocks

International Stocks

5.8%

2.3%

2.1% 1.4% 0.6%

-24.7%

-14.8%

-0.2% -0.8%

THE MARKETS SO FAR THIS YEAR Despite a volatile start to 2016, nearly all asset classes are in positive territory. U.S. stocks have posted three consecutive monthly gains and are now up modestly for the year, driven by stabilizing oil prices and tepid but better than expected economic growth data. Mid-cap stocks are leading the way, followed by large- and small-cap stocks. International stocks have also recovered from sharp declines in January and February. Emerging markets stocks have posted gains driven by commodity price rebounds and a weaker U.S. dollar. Meanwhile, international developed market stocks are still negative for the year despite ongoing economic stimulus programs in Europe and Japan.

2015 YTD 2016

Defying the predictions of many investors, bonds have kept pace with stocks so far this year as interest rates hover at historically low levels. In a sharp contrast to 2015, broad diversification, including exposure to commodities and real estate, has helped investors in 2016. Commodities, last year’s worst performing asset class, is this year’s best; recoveries in oil and industrial metals prices have helped broad commodity indexes bounce back after four years of negative returns. Public real estate, last year’s best performing asset class, continues to perform well in 2016, benefiting from solid demand and low interest rates.

LOOKING FORWARD Accommodative central banks remain the primary capital market driver. The U.S. Federal Reserve recently suggested that it may raise interest rates in the coming months if U.S. economic data continues to improve. Nevertheless, we expect future interest rate increases to be very gradual and well telegraphed. Central banks in Europe and Japan remain highly accommodative and could announce further actions to promote economic growth in the coming months if sluggishness persists. Investors should expect markets to remain skittish, and while we and others predict a low-return environment, we continue to see several areas where patient investors can earn solid returns. Asset class returns are represented by the following indexes: U.S. large-cap stocks (S&P 500 Index), international stocks (MSCI EAFE Index), emerging market stocks (MSCI Emerging Markets Index), U.S. bonds (Barclays U.S. Aggregate Bond Index), commodities (Bloomberg Commodity Index), and real estate (Dow Jones U.S. Real Estate Index).

ELDERCARE PLANNING: FIVE TIPS FOR STARTING

THE CONVERSATION by kathleen burns kingsbury

As we walked out of the hospital, my sister turned to her kids and said, “Please take care of me at home if I get as sick as your grandmother.” I turned to my husband and said, “Just put me in a nursing home and go on with your life.” These two diverse perspectives might have fueled a fight over how to handle mom’s care. But my parents had the foresight to give us the gift of not having to decide. By the time mom had Alzheimer’s and was dying of colon cancer, the family knew what she wanted. She wanted to stay at home as long as possible and forgo any drastic medical treatments that might prolong her life. This was comforting in a weird way. Knowing what my mother wanted, I didn’t have to wonder if we were doing the right thing. The course was set, and the family’s job was to follow it. By 2050, the number of people age 85 and older will triple, and 50 percent of them will experience some form of cognitive impairment.1,2 Even those who don’t develop dementia are likely to need support as they slow down and lose mobility. Therefore, it makes sense to plan for and talk to your family about your care preferences as you age.

Summer | 2016

Discussing end-of-life issues is uncomfortable for most of us. But it is a necessary conversation for many reasons. The best time to engage in this dialogue with your family is when you are healthy and the days where you will need support seem far away. While your motivation may be lower now, when a crisis is not looming, the advantage is that you can be proactive, not reactive.

WHAT IS THE BEST WAY TO BEGIN THIS PROCESS? Here are five tips to get you started.

Do some soul searching. What is important to you as you age? Is it being cared for at home—or being cared for in a way that preserves your dignity and safety? Is it important that your caregiver is a family member or simply someone trustworthy who becomes an important part of the family? What values do you want to honor in your elder years? Take some time to reflect on these questions before communicating your wishes to your family. By doing so, you will be better able to articulate your wishes and your rationale for each one.

Don’t procrastinate. Just ask Jennifer. Her family wanted to plan, but her father insisted that he “would never need a nurse or help.” When he had complications during a surgical procedure, the family scrambled to make decisions and get him the care he needed. “It would have been much better had his pride not interfered and he let us help ahead of time,” Jennifer says now. Our mortality and inevitable physical decline are topics that we naturally want to avoid. It is tempting to think optimistically or ignore the reality of our humanness, but it often leaves the ones we care for most in a stressful position. Fight the urge to procrastinate. Instead, open up the dialogue with your partner and your children. While uncomfortable at first, these money talks can make a family stronger.

Know your options. Being knowledgeable about the options available to you and your family can ease anxiety. From a legal perspective, you should have a durable power of attorney, a healthcare proxy, and a living will at a minimum. When discussing your wishes with your family, review the purpose of each document and where these papers will be kept. They should be easily accessible during an emergency. (For more legal tips, refer to the Expert Angle column on page 20.) Also, discuss the medical and housing options available should you become mentally or physically impaired. Today, there are many choices, including home health care, assisted living facilities, rehabilitation units, day care programs, and nursing homes. Talking about these options and communicating your preferences will ease your loved ones’ minds if the time comes to implement the plan. Continued on page 36

Continued from page 35

Don’t ask for promises. It is easy to agree to keep a parent, partner, or sibling out of a nursing home when you are distant from the situation. But it may not be in anyone’s best interest in the long run. Avoid asking family members to make promises of this type. Instead, talk about what is underneath your request. For example, consider your motivations if you want them to promise to keep you at home. Is it fear of abandonment and a belief that you won’t be abandoned if you’re at home? If so, communicate how you feel. “I am concerned that, as I age, I will be forgotten about. While I would prefer to stay at home, I know that it may not make sense at the time. Just know that it is most important to me that people visit me as I age.”

Expect and respect differences. The beauty of a family is that it consists of individuals with diverse personalities, viewpoints, and generations. While you share a history together, it is unrealistic to think you will agree on every decision when it comes to caring for an elderly parent or impaired family member. Expect and respect differences. Don’t waste time trying to convince others to agree with you. Instead, focus on trying to understand each other. If the conversation gets heated, take a time-out and agree to reconvene at a later time and date. Some families find that working with a professional helps the process. This person can be an advisor, estate planning attorney, or family wealth consultant. As a neutral party, this professional facilitates the discussion, mediates differences, and keeps the dialogue moving forward.

While you share a history together, it is unrealistic to think you will agree on every decision when it comes to caring for an elderly parent or impaired family member. Expect and respect differences.

As one client stated, “Having Gary, the estate attorney, in the room with us, changed the tone and outcome of the conversation. I learned more about my parents and my siblings in 45 minutes than I had in 45 years. It really was a good decision.” Eldercare planning is not a one-time conversation. It is an ongoing dialogue. While it may be challenging to begin the discussion, families who take the risk often find great comfort in having shared their thoughts and feelings with each other before it was too late.

Sources 1 Bahrampour, Tara, “Promise you’ll never put me in a nursing home,” The Washington Post, February 25, 2016. 2 Alzheimer’s Association, alz.org.

Summer | 2016

READER Q & A In this issue, we address reader questions about new regulations from the Department of Labor affecting financial advisors, gifting via qualified charitable distributions, and stock market behavior in election years.

I have been hearing about a new “conflict of interest rule” that will affect financial advisors. Can you explain what that’s about? On April 6, the U.S. Department of Labor released the final version of its long-awaited regulation intended to eliminate conflicts of interest for those in the financial services industry who advise on retirement assets. This 1,100-page set of regulations — known as the conflict of interest rule or fiduciary rule — requires anyone advising on retirement assets in an employer-sponsored retirement plan or individual retirement account (IRA) to acknowledge fiduciary status and act exclusively in their clients’ best interests. This is important in two ways: • Retirement plans such as 401(k)s and pensions have long been covered by fiduciary standards laid out in the Employee Retirement Income Security Act of 1974 — better known as ERISA. This new regulation dramatically increases the number of accounts and assets covered with the extension of these same fiduciary standards to IRA accounts. • Fiduciary standards are a higher level of care than the suitability standards that brokers have historically been required to uphold. Fiduciary standards require advisors to put their clients’ interests first when it comes to fees and investment choices and to act with the care, skill, prudence, and diligence that a prudent person would exercise based on their clients’ circumstances. The fiduciary rule will be disruptive for advisors with business models dependent on high fees and commissions as they adapt and seek to comply with the new requirements. Nonetheless, we believe this new regulation will benefit a great many investors as their advisors will now be legally and ethically required to work in their best interests. Hopefully, this will foster greater trust and confidence in the advice they receive over time and drive better outcomes for American savers. As a CAPTRUST client, you need to know that we have always adhered to fiduciary standards. We are proponents of this new regulation. We feel it is a validation of our business model and is the right way to do business. Working in our clients’ best interests has always been — and will continue to be — at the heart of what we do.

Are qualified charitable deductions still available for individual retirement accounts? Yes. At the end of 2015, lawmakers approved a permanent measure allowing individuals to make qualified charitable deductions (QCDs) from their individual retirement accounts (IRAs). This strategy allows an IRA owner over age 70½ to make a charitable contribution directly from his or her IRA. A QCD can come from a SEP or SIMPLE IRA but not from an employer-sponsored retirement plan, such as a 401(k) or 403(b). The distribution must be sent directly from the IRA to a charity that is eligible to receive tax-deductible contributions under Internal Revenue Service rules. The amount of the QCD is excluded from the IRA accountholder’s adjusted gross income (AGI) and can satisfy all or part of his or her account’s required minimum distribution (RMD). Lowering (or not increasing) AGI is beneficial in that a taxpayer may: • Avoid the loss of exemptions, phaseouts, credits, and deductions due to AGI limits; • Avoid the alternative minimum tax (AMT); • Avoid increases in premiums for Medicare Parts B and D; and • Receive a tax benefit — even if he or she takes a standard deduction. QCDs can also offer tax advantages. A QCD can be a more tax-efficient way to make a charitable contribution of cash than taking an IRA distribution and then making a charitable contribution since, in the latter case, the income and the deduction often don’t offset completely. It is important to note that a charitable gift of appreciated securities from a taxable account may be more tax efficient than making a QCD. And QCDs can’t be made to donor-advised funds, private foundations, or charitable gift annuities. However, IRA owners over age 70½ — and who are charitably inclined — may want to consult their financial and tax advisors about the potential tax advantages of a QCD.

Summer | 2016

How have presidential elections historically affected the stock market? Not surprisingly, researchers have studied the question of how markets have performed during election years from a variety of angles, looking for patterns and actionable trading strategies. Their results have been mixed. To answer this question for ourselves, we looked at how the S&P 500 Index, a broad measure of stock market performance, behaved during each presidential administration going back to 1945, the year Truman assumed the presidency — with a specific focus on election years. We found that the average annualized return of the S&P 500 during Democratic presidencies was 9.7 percent — compared to 6.7 percent for Republican presidencies. Since stock market returns over the long term are driven by underlying economic growth, this disparity may be partially explained by the 3.7 percent gross domestic product growth during Democratic presidential administrations versus 2.6 percent during Republican administrations. Meanwhile, the average return for the S&P 500 during election years has been 9.9 percent, although 2016 is more unusual since it is the last year of a two-term president’s administration. While this has only occurred five times since World War II — a very small data set — the average S&P 500 return for the eighth year of a president’s term has been a loss of 2.1 percent. Some researchers suggest that presidents in their final years are seen as less predictable. Others suggest that the markets simply dislike the uncertainty of open races. Regardless, it is important to note that stock market returns are the function of myriad economic variables and global influences — not just U.S. presidential elections — so you should be cautious about drawing conclusions. And, of course, the past performance of the S&P 500 Index is not an indicator of future performance of the stock market or any specific security.

If you have a question for the VESTED team, we’d love to hear from you and see if we can help. Please send your questions to us at VESTEDmagazine@captrustadvisors.com.

DONOR-ADVISED FUNDS:

CHARITABLE GIVING MADE EASY by john curry

Barry and Eugenia Frank of Greensboro, North Carolina, were interested in a simple way to accumulate assets that could fund community college scholarships and grants for medical research.

While familiar with private and community foundations, they sought the convenience and simplicity of a donor-advised fund (DAF) to implement their planning. Barry believed the flexibility of its use and future funding was attractive. “I am very positive as to how this turned out,” he says. A donor-advised fund is an easy-to-open, low-cost, and flexible account for charitable giving that is a popular alternative to creating a private foundation. Donors can contribute all types of assets to it, including cash, stocks, mutual funds, real estate, and business interests. They receive an immediate tax deduction for their irrevocable donation. When donors are ready, they can offer guidance or advise the DAF administrator on how the money should be used for grants to support their favorite Internal Revenue Service-qualified public charities. “This is a great tool that is simple and efficient in both implementation and operation,” says Mike Gray, the Franks’ CAPTRUST financial advisor in Raleigh, North Carolina. Nick DeCenso, CAPTRUST’s manager of wealth strategy, says more clients should consider using DAFs for charitable giving. There are so many positives, he says. “You get to start your own charitable account. You get a tax break, and the money can be invested until you’re ready to gift it, which may be years down the road.” 40

Summer | 2016

Anybody who gives to charity on a consistent basis should consider a donor-advised fund, says Brian Deacy, national fundraising manager for Fidelity Charitable, which offers the nation’s largest DAF program. An account can be opened with them with as little as $5,000. There are many other DAF administrators that offer these accounts, including Schwab Charitable, Vanguard Charitable, National Philanthropic Trust, the National Christian Foundation, and community foundations. Interest in these accounts is skyrocketing. Contributions hit an alltime high of $19.7 billion in 2014, according to the 2015 DAF report from National Philanthropic Trust. There were 238,293 accounts in 2014, with an average account balance of $296,701, the report found. Donor-advised funds are easier to create and require less money to start and operate than private foundations, Gray says. It takes a lot of legal work to create a foundation. You have to file tax returns each year, and there are minimum payouts that you have to make each year, he says. “You probably don’t want to make the effort required for a private foundation unless you are going to put a million dollars or more into it.” Donating appreciated securities is considered one of the best ways to fund a DAF. It makes sense in terms of “tax economics,” Gray says. For instance, say you made a $50,000 investment in a stock, and now

it’s worth $200,000. If you put the stock in a donor-advised fund, you get an immediate tax break, and you avoid paying taxes on the capital gains. “It’s much smarter than selling the appreciated stock, paying taxes on it, and then giving the cash that’s left away to a charity.” Once the stock is in the account, you can sell it and invest it in a more diversified manner. You don’t have all your eggs in one basket, and your new investment can grow tax free, he says. If you donate cash to a DAF, you’re generally eligible for an income tax deduction up to 50 percent of your adjusted gross income (AGI), according to fidelitycharitable.org. If you have long-term appreciated assets — such as stocks, bonds, or real estate — you generally won’t have to pay capital gains, and you can take an income-tax deduction in the amount of the full fair market value, up to 30 percent of your AGI. These are higher tax deductions than you would get for similar contributions to a foundation. The majority of contributions to donor-advised funds with Fidelity Charitable are made in capital assets, such as publicly traded securities, shares in private business interests, and real estate, which many nonprofits find costly, time consuming, or even nearly impossible to accept. “Somebody even gave a percentage of their ownership in a thoroughbred horse,” Deacy says. Eileen Heisman, president and chief executive officer of National Philanthropic Trust, says unusual or complex assets, such as real estate, art, coins, and antiques, comprise a large share of some donors’ wealth. “Many large DAF sponsors have the resources and experience to help donors efficiently convert these assets into mission-critical financial support for charities in the U.S. — and even around the world.” For some people, DAFs have become a family affair. “We have a lot of families who sit down together and decide which charities they are going to support,” says Alanna Linden,

“Many large DAF sponsors have the resources and experience to help donors efficiently convert these assets into mission-critical financial support for charities in the U.S.—and even around the world.” Eileen Heisman President and Chief Executive Office, National Philanthropic Trust

president of the National Christian Foundation Raleigh. Then, the parents have their children help them make the grants online. Some have incorporated DAFs into their Christmas traditions. One family has each child select a charity he or she wants to give $500 to. Then, on Christmas morning they explain why they chose that charity, she says. Philip M. Savage IV, an estate planning attorney at Gresham Savage in Riverside and San Bernardino counties, California, and chairman of the board for the local community foundation, often works with his clients to set up DAFs as part of their estate planning. You can set up the funds so you and your spouse will be the advisors, and if one of you passes away the other will be the advisor. After you both are gone, your kids can be the advisors. It can help instill the culture of philanthropy in your kids, he says. Establishing a DAF with a community foundation allows you to give to the local charities you are passionate about, such as a homeless shelter, a library, educational causes, a symphony, or botanical gardens, he says. Clients who are interested in a DAF should work with their financial advisor to choose the right provider, DeCenso says. “Donor-advised funds can be a powerful tool for the charitably inclined. Most people are surprised to learn the benefits, and many wonder why they didn’t use them earlier.”

RECOGNIZING COLLEAGUES CEO of the Year CAPTRUST CEO and Co-founder Fielding Miller was recognized by the Triangle Business Journal in its 2016 CEO of the Year Awards. The class of 2016 was selected by peers and evaluated based upon the nominees’ likely impact on the region’s success in years to come. This award comes as CAPTRUST reaches the end of its initial 10-year strategic plan, a period that has witnessed the firm’s extraordinary growth.

Lauren (pictured above, left) is involved in numerous projects in the performance reporting group and always has an eye out for ways to improve processes, save time, and enhance the accuracy of CAPTRUST’s reporting functionality.

Charlotte’s Top Financial Planners

An excerpt from the announcement said “Fielding is a one-of-a-kind leader. He’s both humble and a strong motivator who isn’t afraid to challenge colleagues to do their best to help us live up to the company mission.” As CEO, Fielding continues to lead corporate strategy, ensuring that CAPTRUST continues to innovate and remains competitively positioned.

CAPTRUST was recognized as the largest financial planning firm in the Charlotte area in the May 6 issue of the Charlotte Business Journal. This annual ranking included nearly 40 contenders and was determined based on local client assets. CAPTRUST’s Charlotte office edged out Wells Fargo Advisors and Morgan Stanley with $15.8 billion of local client assets under advisement. CAPTRUST also topped the list of fee-only financial planners in the Charlotte market.

Excellence Award Winners

Summerlin Named Partner

Daniel Dysinger and Lauren Palsgrove were recognized by their peers and the organization as recipients of the CAPTRUST Excellence Award. Their contributions to the organization are visible in their attitude and performance, which positively impacts our clients and the company’s culture.

In March, Senior Vice President and Financial Advisor Danny Summerlin (pictured above, right) was named CAPTRUST’s newest advisor shareholder partner in recognition of his exemplary record of serving the needs of his clients and his contribution to the success of the firm.

Daniel Dysinger

Summer | 2016

As a member of the information technology department, Daniel distinguished himself by improving connectivity between offices, addressing issues and efficiently solving problems, and implementing solutions with a broad and positive impact across the organization.

Danny joined CAPTRUST in 2006 and now provides advisory services to more than 80 clients representing nearly $175 million in personal and retirement assets. Prior to joining the firm, he served as a relationship manager for individual and institutional investors at Franklin Street Partners and has worked in the industry since 1995. Danny received a Bachelor of Arts degree in industrial relations and political science from the University of North Carolina and a Master of Business Administration from the Kenan-Flagler Business School. He holds a Certified Financial Analyst (CFA®) professional designation.

Shareholders’ Meeting On March 18, CAPTRUST hosted its annual shareholders’ meeting, where the firm’s employee-owners received updates on corporate initiatives, company performance, and strategic planning topics from CEO Fielding Miller and COO Ben Goldstein. The event, held at the Carolina Inn in Chapel Hill, North Carolina, provides employees from all ranks of the firm an opportunity to interact.

CAPTRUST is consistently involved as a subject matter expert at local, regional, and national events on topics that are important to our clients and our industry. ECU Business Leadership Conference Financial Advisor Kevin Monroe (pictured left) spoke to more than 1,500 business students at East Carolina University’s annual Business Leadership Conference on the topic of helping professional athletes understand the benefits of budgeting, saving, and investing properly. Held in April, this conference helps to prepare students for the realities of the business world in a professional conference and networking environment.

The Estate Planning Tool Box In May, the Heritage Society of the Northampton Community College Foundation hosted a breakfast meeting titled “The Estate Planning Tool Box: Do You Have What You Need?” At the meeting, CAPTRUST Senior Director Chris Gray provided his insights and experience on the proper use of wills and powers of attorney, estate taxes, beneficiary issues, and a number of related topics.

The Investment Institute’s Spring Forum

INDUSTRY INVOLVEMENT

CAPTRUST Chief Investment Officer Eric Freedman was a featured panelist on international markets during The Investment Institute’s Spring Forum in May. The Investment Institute is a membership association committed to providing an environment for senior investment decision makers to discuss the latest developments and trends in the financial marketplace. 43

CAPTRUST GROWTH In the first half of 2016, CAPTRUST added significant talent and resources to the organization in the form of two key home office hires and six financial advisors in four locations.

Erica Blomgren Erica joined CAPTRUST as a vice president and financial advisor in the firm’s Raleigh headquarters office. As an institutional advisor, she is responsible for providing retirement plan advisory services to corporate fiduciaries. Prior to joining the firm, Erica worked on the investment research teams at ShearLink Capital and JAT Capital, and has worked in the industry since 2008. She earned a Bachelor of Science degree in business administration from the University of North Carolina at Wilmington.

Chris Garner Chris joined CAPTRUST’s Doylestown, Pennsylvania, office as a vice president and financial advisor responsible for providing retirement plan advisory services to corporate fiduciaries. Prior to joining CAPTRUST, Chris served as vice president and senior business development officer at PNC Institutional Investments. He has worked in the industry since 1992 and earned a bachelor’s degree in business administration from Adelphi University.

Joey Goodspeed Joey joined CAPTRUST as a vice president and financial advisor. He is an institutional advisor located in Chicago and provides retirement plan advisory services to corporate fiduciaries. Joey served as retirement plan consultant at ADP prior to joining CAPTRUST. He earned a bachelor’s degree in business management from the University of Notre Dame.

Summer | 2016

Tyler Gupton Tyler joined CAPTRUST as a vice president and financial advisor and is responsible for providing retirement plan advisory services to corporate fiduciaries. He is located in the firm’s Raleigh headquarters. Previously, Tyler served as regional consultant at Goldman Sachs. He has worked in the industry since 2010. Tyler earned a bachelor’s degree in urban and regional planning from East Carolina University and holds the designation of Chartered Retirement Planning Specialist (CRPS®).

John Sandmann John joined CAPTRUST’s Dallas, Texas, office as a vice president and financial advisor. He is responsible for providing retirement plan advisory services to corporate fiduciaries and comprehensive wealth management services to high-net-worth investors, private foundations, corporate executives, and business owners. John served as a financial advisor at Edward Jones prior to joining CAPTRUST and has worked in the industry since 1985. He earned an associate’s degree from Joliet Junior College and a Bachelor of Arts in liberal arts with a concentration in accounting from Governors State University.

Chris Winters Chris joined CAPTRUST as a vice president and financial advisor and is responsible for providing retirement plan advisory services to corporate fiduciaries. Prior to joining CAPTRUST, Chris served as a leasing representative at EDENS Realty. He earned a Bachelor of Arts in economics from Wake Forest University.

CAPTRUST GROWTH (continued)

Lorna Hern With more than 30 years of industry experience, Lorna joined CAPTRUST as a manager responsible for overseeing wealth management client service and the professionals responsible for those efforts. Prior to joining CAPTRUST, she served as an assistant regional director and vice president at Cambridge Investment Research and performed similar functions at First Citizens Investor Services. Lorna attended Western Kentucky University and Sawyer Business College.

Jon Meyer Jon joined CAPTRUST as chief technology officer responsible for leading the firm’s information technology team. His role is to ensure effective and secure technology operations, to manage the development and support of proprietary applications, and to implement strategies that position the firm for sustained growth. Prior to joining CAPTRUST, Jon served as a managing consultant at Greenway Solutions and has worked in the industry since 1990. He received a Bachelor of Arts degree in public policy studies from Duke University.

GIVING BACK Charity of Choice The CAPCommunity Foundation announced in February that The Children’s Home of Easton is 2016’s charity of choice. The Children’s Home of Easton serves at-risk children with therapeutic, campus, and community-based programs for dealing with abuse, neglect, and other traumatic experiences. It is a private, nonprofit organization situated in Easton, Pennsylvania, that provides longterm care through professional staff who guide, support, and encourage children to believe in their own self-worth and reach their full potential. The Home, which has been serving its community since 1885, is a favorite local cause of CAPTRUST’s Bethlehem office. As an organization, CAPTRUST employees have divided into fundraising teams with the collective goal of surpassing last year’s total donation amount. To learn more about The Children’s Home of Easton, please visit thechildrenshome.org.

(above) CAPTRUST colleagues volunteer at a fundraising booth during the second annual Midtown Music Fest in Raleigh’s North Hills. (left) CAPTRUST cycling enthusiasts participate in the annual Bike for Hope fundraiser focused on mental illness detection and treatment.

“I talk with families about their goals. My job is to help them plan, make them think, and put them in touch with people to help.” — Land Hite Senior Vice President, Financial Advisor

We believe an investment advisory firm is only as strong as the people who create the advice. CAPTRUST was built on the belief that investors are best served by financial advisors motivated to focus exclusively on their clients’ best interests. Our commitment to independence and transparency has enabled us to grow from the entrepreneurial vision of our founders to one of the largest independent investment advisory firms in the country.

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